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IIR 02-081 – HSR Study

IIR 02-081
Use of VA Pharmacy by Medicare Enrolled Veterans
Robert O. Morgan, PhD
Michael E. DeBakey VA Medical Center, Houston, TX
Houston, TX
Funding Period: July 2003 - June 2006
VHA is the largest single purchaser of pharmaceuticals in the U.S. Over 85% of VA users aged 65 or over are enrolled in Medicare. However, there is very little information for policy makers on how VA pharmacy use by Medicare enrolled veterans impacts expenditures within the VA health care system, or how Medicare+Choice (M+C) plan benefits and enrollment affect Medicare-enrolled veterans' use of VA pharmacy services.

The goal of this study is to examine the association between Medicare managed care enrollment by VA users and pharmacy use and cost in the Veterans Health Administration (VA). In Aim 1 of this study we are using national VA and Medicare administrative files to examine how Medicare managed care enrollment status and pharmacy benefit coverage affect variation in (a) the total number of patients seeking pharmacy care at individual VAMCs, and (b) overall pharmacy expenditures at those VAMCs. In Aim 2, we are testing the association between Medicare managed care enrollment and pharmacy use in three national cohorts of VA patients: chronic heart failure (CHF), ischemic heart disease (IHD), and diabetes (DM). These cohorts are prevalent in the VA population, are treated with medications, and are part of the VA Quality Enhancement Research Initiative (QUERI).

This study is a cross-sectional and longitudinal analysis of VA pharmacy use and its association with M+C plan enrollment, using existing national administrative and utilization databases for years 1999-2002. The analyses for this study will focus on the population of all elderly, Medicare-eligible veterans identified as using the VA medical care system. We will use Department of Veterans Affairs Medical Center (VAMC) inpatient, outpatient, and pharmacy data (both DSS and PBM) merged with national Medicare administrative data.

In CY 2002, 2.3 million Medicare-enrolled veterans in 127 VAMCs received some or all of their medications from the VA. This amounted to 5.4% of all Medicare enrollees (11.5% of all male Medicare enrollees and 0.7% of female enrollees). Nationally, the VA pharmacy services provided to Medicare-enrolled veterans totaled $2.4 billion, or 68% of all VA pharmacy costs. Of all Medicare-enrolled VA pharmacy users, 12.2% were enrolled in a Medicare HMO for all or part of CY 2002, and they accounted for 10.2% of all VA pharmacy costs attributable to Medicare-enrolled veterans.
There were 150 Medicare managed care contracts operating in 556 counties in CY 2002 with about 42% of these counties having just one plan. Thus, across VAMCs, there was wide variation in the percentage of managed care enrollees among Medicare-enrolled pharmacy users (from < 1% to > 49%) and in the percentage of pharmacy costs associated with their use (from < 1% to > 41%). The average annual cost to the VA pharmacy service for veterans enrolled in Medicare FFS was $1,101 (sd = $2,794), compared to an average cost of $847 ($1,969) for pharmacy users enrolled in a Medicare managed care plan (p = .0001). However, among veterans enrolled in both the VA and Medicare systems (i.e., those contained in the VA-Medicare merged denominator file for CY 2002), those enrolled in a Medicare managed care plan were just as likely as Medicare FFS enrollees to seek at least some of their pharmacy care from the VA (47% versus 49%, respectively, received at least some VA pharmacy care during CY 2002). Thus, although the magnitude of their pharmacy service use is reduced relative to Medicare FFS enrollees, Medicare managed care enrolled veterans continue to receive a substantial amount of VA pharmacy care.
For Aim 2, our analyses of CY 2000 PBM data show that FFS and Medicare managed care enrolled members of our three disease cohorts were equally likely to have received condition-related classes of medication within CY 2002, suggesting that cohort members continue to use the VA for the full-spectrum of their condition related medications. However, our analyses of the CY 2002 DSS pharmacy cost data for these cohorts shows that managed care enrolled cohort members had lower overall pharmacy costs than those enrolled in Medicare FFS. Both sets of findings were consistent across all three cohorts. Thus, our findings for our cohort analyses coincide with our findings for the general population of Medicare enrolled VA pharmacy users.

This study will provide needed information about the use of VA pharmacy services by M+C enrolled veterans and will aid in the development of models estimating the effect of Medicare policy on VA pharmacy expenditures.

External Links for this Project

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Journal Articles

  1. Parikh NM, Morgan RO, Kunik ME, Chen H, Aparasu RR, Yadav RK, Schulz PE, Johnson ML. Risk factors for dementia in patients over 65 with diabetes. International journal of geriatric psychiatry. 2011 Jul 1; 26(7):749-57. [view]
  2. Johnson ML, Petersen LA, Sundaravaradan R, Byrne MM, Hasche JC, Osemene NI, Wei II, Morgan RO. The association of Medicare drug coverage with use of evidence-based medications in the Veterans Health Administration. The Annals of pharmacotherapy. 2009 Oct 1; 43(10):1565-75. [view]
Conference Presentations

  1. Morgan RO, Davila JA, Byrne M, Paterniti D, Hasche J, Petersen LA. Does Relying on the VA Health System Affect Enrollment in Medicare Managed Care? Paper presented at: AcademyHealth Annual Research Meeting; 2005 Jun 1; Boston, MA. [view]
  2. Wei II, Morgan RO. Familiarity with Medicare and Self-Reported Access to Care. Paper presented at: AcademyHealth Annual Research Meeting; 2006 Jun 25; Seattle, WA. [view]
  3. Morgan RO, John D, Davila JA, Byrne M, Sundaravaradan R, Wei II, Paterniti D, Osemene N, Petersen LA. The Effect of Medicare Managed Care Plan Benefit Levels on Use of the VA Medical Care System. Paper presented at: AcademyHealth Annual Research Meeting; 2005 Jun 1; Boston, MA. [view]
  4. Morgan R. Use of Spanish surname match to reduce bias in interpreting Medicare data for Hispanic/white veterans. Paper presented at: VA HSR&D National Meeting; 2006 Feb 1; Washington, DC. [view]
  5. Morgan RO, Hasche J, Osemene N, Byrne M, Sundaravaradan R, Wei II, Petersen LA, Johnson M. Use of VA Pharmacy Services by Medicare Enrolled Veterans. Paper presented at: AcademyHealth Annual Research Meeting; 2005 Jun 1; Boston, MA. [view]
  6. Morgan R. Use of VA Pharmacy Services by Medicare enrolled veterans. Paper presented at: VA HSR&D National Meeting; 2006 Feb 1; Washington, DC. [view]

DRA: Mental, Cognitive and Behavioral Disorders, Health Systems
DRE: Epidemiology
Keywords: Cost, Pharmaceuticals, Utilization patterns
MeSH Terms: none

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